Regulator warns that deflation, new market bubbles a danger

(ANSA) - Rome, January 14 - Although the worst of the
economic crisis is over, risks to financial stability remain,
Giuseppe Vegas, the head of the Italian market regulator Consob,
warned Tuesday.

Vegas told the House finance committee that the risk exists
across the eurozone.

"In a scenario of moderate recovery, the risks to financial
stability - especially in the euro area - remain significant,"
said Vegas.

A lesson of the global financial crisis that began in 2008
is that a coordinated response by regulators from around the
world is essential, he added.

"The experience of recent years teaches that the responses
of regulators should be more timely, more coordinated at the
international level, but this requires that the ultimate
decision-making power is increasingly concentrated on
supranational supervisory bodies".

In his comments to the committee, Vegas also warned that he
sees risks of deflation in the eurozone along with a danger of
new financial market "bubbles" in other parts of the globe
because of abundant liquidity and low interest rates.